Litigation Finance and Arbitration: Part I

If you are contemplating filing a lawsuit against an individual or corporation you may first hear of arbitration as an option and wonder what is arbitration? In this short series, these blog posts will cover what arbitration is, how it can be connected to litigation finance companies, and current issues in arbitration.

To start, arbitration is just one of the methods of alternative dispute resolution (ADR).  As the name suggests ADR is an alternative way to bring your grievance rather than filing a lawsuit and going to court.

The way that our United States justice system is set-up is that everyone has a right to go to court.  Therefore, if one party would rather arbitrate a disagreement then they will need to convince the other party to get on board with arbitration.  If the second party refuses to arbitrate than the issue will go to court.

However, what you may not realize is people agree to arbitration all the time without necessarily realizing it.  This is because an agreement to go to arbitration does not have to happen only after an issue arises but it can also be agreed upon before any issue comes up.  This means that many employee contracts, or other contracts between two parties, include an arbitration clause.

Arbitration is a very broad clause that can take many forms.  But most common, the complaining party will send the opposing party a notice of their intent to arbitrate a dispute and explain what basis of the dispute. The opposing party will then have a period to respond before there is a selection of arbitrators and a hearing is held.  Depending on the kind of arbitration there may be just one arbitrator or there may be a board of arbitrators but usually the selection process for picking arbitrators requires input from both parties.

The rules of arbitration also vary widely from case to case but there are sometimes specific guidelines set out in the arbitration section of the contract between two parties.  If not an attorney specializing in alternative dispute resolution can often help. Usually, there are similar components in arbitration as there would be in a trial such as evidence, arguments, and witnesses but the process overall is meant to be quicker and simpler.

At the end of a hearing there is a ruling delivered by the arbitrator or panel or arbitrators.  Depending on the type of arbitration this may be a final ruling or there may be an option to appeal this ruling in another procedure.

Topics:  litigation finance, alternative litigation finance, third-party funding, arbitration, alternative dispute resolution

 Works Cited:  What is Arbitration?